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- The economic impact and the steps toward recovery from COVID-19 tonight on Behind the Headlines.

[intense orchestral music] I'm Eric Barnes with The Daily Memphian and thanks for joining us as we continue to do the show remotely.

I am joined tonight for a conversation about the economic impact locally of COVID-19.

And first stop is Beverly Robertson president and CEO of the Greater Memphis Chamber of Commerce Beverly thanks for being here again.

- Glad to be here with you Eric.

- We're also joined by Ted Townsend who is Chief Economic Development Officer with The Chamber.

Ted thanks for being here.

- Thank you very much Eric.

- Along with Bill Dries, reporter with The Daily Memphian.

Will talk about that you know COVID has hit the whole world obviously you mean to tell you that but it has had particular impacts here in Memphis and there is sort of I don't want to get too excited but there is some hope on the horizon.

With vaccine distribution improving for all its flaws and we can maybe begin to look towards where we've been and where we're going economically on the local level.

And so for you Beverly the first question and then the same to Ted.

what from your point of view is the biggest hit that the Memphis area has taken in this last year of pandemic and how do we recover from those very bad hits that we have taken?

- Well I will tell you that the small businesses have been hit tremendously bad.

And as a result of some of them are shuttered some remain open but are only making marginal profits many have had to release their employees and are struggling themselves to be able to maintain some sense of business.

And that's why the Greater Memphis Chamber literally had a session or a series of sessions with small businesses to really talk about how we build resilience among them.

And those sessions occurred over a two month period and that was really important because at the end of the day what we will have is a document or playbook that will help them if situations like this ever occurred again it will help them better navigate it.

And of course the lodging and hospitality industry is the other industry that was hit tremendously and we'll be working with them as well.

But I would also say individuals have been hit and a lot of people are losing their houses, not able to pay their rents or their mortgages.

Young students, college students are not able to pay their college loans.

So there are a lot of repercussions or I shouldn't say a lot of collateral damage that has resulted from this pandemic and The Chamber is working with certainly the businesses to try to ensure that we stabilize them and help them to grow.

And one thing that will help us is our ability to continue to attract a new investment into the marketplace and help existing businesses expand and grow and we are all about doing that.

- To you Ted I think we all know and have seen that this people talk about this K shape recovery or even the K shaped impact of COVID in the sense that I can do my job from home from I may be slightly crazy and slightly bored and tired of these walls but I get my laptop and I have computer and all the people the daily Memphian.

And many businesses are like that.

And this last year if you had a 401[k] you probably saw gains.

If you had a house you probably saw value appreciation and maybe got to refinance your loan but if you didn't have that kinda job and you didn't have that kinda economic underpinning, you had to go into work probably wherever that was at great risk potentially.

And a lot of job losses were and more hourly workers and those kinds of positions.

It was a very in many ways stratified nationally and I'm not picking on Memphis here impact the COVID has had.

How do you respond to that is that what you've seen and again to some of Beverly's points how do we as a community and you as a Chamber help the community come back from where we've been?

- Yeah well thanks for that Eric you've seen a recovery of the job losses I've been tracking that.

We're still 3% behind where we need to be but what's really important is that we've recovered 73% of those jobs jobs that we lost in the March and April timeframe of last year where it was a precipitous drop obviously.

I think that pre COVID obviously Memphis was seeing a boom of capital investment in various projects in our community.

And that I believe makes it less spongy in terms of a recovery and resiliency.

There's some key ingredient there of resiliency that I'm tracking.

And I will also say that from a project perspective we have over 40 projects in our pipeline right now in fact we've received five just this week.

That's encouraging I think businesses are looking at making investments, they're looking at moving their capital, they're looking at creating jobs, and that bodes very well for the Memphis economy.

So our focus is really laser targeted on making sure that we close on some of these projects, making sure that we help existing businesses that are here in the Memphis market that have interest in investment and creating jobs that they get through these transactions and that we see contributions of that directly to our economy.

I feel that there's a great sense of momentum Memphis is moving and I'm encouraged by the key economic indicators that we're tracking right now.

- Let me bring in Bill Dries, Bill - Ted to your point have we seen the workforce move around and I'm referring specifically to something that Kevin Kane talked about at the outset of this pandemic when he talked about how some of the tourism and hospitality workers might have gone to other jobs in some cases jobs that may have have paid better.

So how has our workforce been rearranged by this to some degree.

- Yeah thanks Bill.

I think there has been some shifts in the workforce certainly People will follow opportunity as they should and so we're monitoring that but I think that the focus that we have at The Chamber is on the jobs that are within our pipeline.

Opportunity jobs, high quality jobs, that I think will give the workforce here in Memphis even more options for when they come online they have options to onboard with these exciting firms that are providing new opportunities for them in the Memphis market that may have been non-traditional from their backgrounds.

And again if you couple that with our efforts with up skill 901, where we're looking at taking individuals in the Memphis market where they are in their career pathway up skilling them to new opportunities within the career of their choice.

That is where we're gonna see the increase in per capital income we're gonna see the increments and improvement of GDP and overall the condition of the Memphis market will improve.

- Beverly time is money and the longer that this recovery takes the more perilous it becomes for businesses big and small.

So I'm wondering how perilous is this period where we're on the way back in some ways it seems like it's probably more dangerous in some ways than the pandemic itself was or is.

- You make a good observation Bill and I would simply say if we think back to 2008, when there was a significant economic downturn it took us about 10 years to recover.

The difference though is that we weren't all isolated from each other.

I actually think in it and based on what I've read from economic forecasts particularly McKinsey & Company who actually did a webinar for the Greater Memphis Chamber along with Bill Rhodes from Auto Zone and Rick Shadyac.

And one of the things they said is they expect that this pandemic will be reduced significantly by the end of the summer and that we will begin to see recovery in markets like Memphis and others across the country and by the end of the year when the pandemic they believe will be totally under control that the next year will be a very successful year certainly as everything gets back to some measure of normalcy.

So I am optimistic because of the data that Ted said about 73% of the jobs have already been filled or re-established and people are seeking and gaining employment.

And I'm also encouraged because I think once travel is renewed then we will be able to see some significant hits.

If you coupled that with our economic development attraction strategies to attract new investment and help existing businesses grow then I think we're in a good position to see the economy come back over the next couple of years pretty strongly and we don't have to wait 10 years to be able to see that.

And what has been so optimistic for me is the number of companies that continue to look at Memphis as a major player in this economic ecosystem.

So we're encouraged and we're optimistic here at the Greater Memphis Chamber about the possibilities for Memphis.

- Before I go back to Eric let me ask you about the stimulus package that the president is in the process of taking to Congress.

A lot of debate about how much is enough and how much is enough to really make sure that the economy comes all the way back.

Where is The Chamber on what that stimulus package should include?

- We actually have not taken a position on yay or nay but what we do know is this economy does need to have stimulation on both from a business perspective and individual perspective.

Because what we realize is that there are some industries that continue to grow during the pandemic but there also many other industries that are dying or on life support.

And if something is not done something substantial, something significant is not done to spur that growth and development to allow them to come back to help them to get things moving in the right direction again we're gonna lose a lot of businesses in this country and those businesses employ lots of people that means that our unemployment rates will climb if they don't get some economic support and some economic stimulation to allow them to rebuild, allow them to grow and allow them to expand.

So we certainly are in support of additional stimulus dollars and I'll leave it to the folks smarter than I am to determine what that amount ought to be because that's a little bit above my pay grade Bill which weigh in specifically on that.

But I do know it is imperative that we receive those stimulus dollars, some measure stimulus dollars.

- Oh go ahead Bill - Yeah Ted what do you think getting over the hump looks like for our economy in particular here in Memphis?

- Yeah well thanks.

I would say that both with respect to the stimulus it's important from Memphis to skate to where the puck may be.

Either way as we bolster E-commerce and support transportation, distribution, and logistics which is obviously an inherent strength here in the market.

I think also pursuing other sub sectors and opportunity clusters is really critical for our strategy moving forward.

We have the mass economic study obviously it mirrors very well and aligns very well with the state strategy on economic development and focusing on industry clusters.

And that is where we're gonna divert all of our attention to working with companies within those areas that obviously Memphis has those strengths.

We're looking at deepening those strengths within those opportunity clusters so that we have more shots on goal.

I feel very encouraged by not only the mix of projects in our pipeline now I mentioned over 40 those represent nearly 5,000 jobs almost 2 billion in capital investment.

The average wages of those are 64,000 and above.

So I feel like we are poised to really seize that pent up demand and respond to it.

I think other markets have been known as the fit's city and their past that's a fad I'd like to have Memphis be the fit city whereas we are the best fit for this new investment that is on the horizon.

- For me a couple of things that we are we talked a bit about tourism and Bill I think mentioned Kevin Kane.

We will have Kevin Kane from Memphis travel formerly the Convention Visitors Bureau on the show next week as well as Denny Riley who is a co-owner of a restaurant downtown also on the board of the Downtown Memphis Commission.

And certainly restaurants have been kind of the poster child for the hit that businesses have taken and particularly small businesses so we'll get deeper into that next week.

Another thing we're doing in a few weeks from now is diving back into the conversation about PILOTs and we'll have Ried Dulberger from EDGE which is the kind of group that administers the PILOT tax incentives.

And we'll have some county commissioners and City Council People who are for and against it we'll do a couple shows.

And to you Beverly this debate about PILOTs the debate about which are Payments in Lieu of Taxes they are a very commonly used tax incentive here in Memphis.

I would assume that some of the projects that Ted has talked about could end up involving having PILOTs tax incentives to make them happen.

The sort of billions of dollars in investment that were either projected or been underway throughout this pandemic.

Big developments down town and especially but elsewhere have involved PILOTs and other types of tax incentives.

where do you stand where does The Chamber stand Beverly on PILOT reform are you concerned about what some elected officials are talking about, about reducing the reliance on PILOTs and putting more checks and steps in place before PILOTs are given?

Or do you welcome that debate and do you welcome more involvement from say the City Council and the County Commission?

- I will tell you that unfortunately having incentives is the cost of entry in playing if you don't offer incentives you don't play.

That means you have no ability to attract new businesses and higher level investments and higher wage jobs into the marketplace.

So that is just the cost of entry and that's a reality.

So if we're not offering it and everybody else in the United States is offering it guess where that places Memphis.

And that is the stark reality of what we are talking about.

So when we talk about reform I think that since we only have one tool in our toolkit and that really is tax abatement, other cities have cash tax abatement and other offerings that are attractive to businesses that are interested in coming into the marketplace.

But we have one tool and if that tool is cut off then we have issues.

I don't have any problem at all having a discussion trying to identify what the elected officials feel, what their questions are, whether or not their questions are being satisfied I think The Chamber can play a role in helping to satisfy some of those questions provide some answers.

And really I think that when you think about the City Council and the County Commission there are a lot of new members on board who don't really have history, they may not be fully educated about PILOTs and their value and how Memphis sits relative to competition and other size markets and those that are surrounding us.

So I think that a discussion is always good, I think conversations are always good but I will say that there is no way we will be able to attract new investment higher wage jobs.

And even if we decided that we wanted to suspend that for a period of time, that might as well be a suspension for the next five years because once you are not in the game and you are forgotten about.

So I would say discussion is good dialogue is wonderful it's great to understand where the issues are and try to address them.

But I really think it is vital to the success of this marketplace and to the success of our work to certainly have indistinct.

- Ted before you worked with The Chamber you spent some time doing government affairs for the diversity Memphis But you spent seven almost eight years under the Haslam administration in the I'll get the name wrong but the Division of Economic and Community Development for the state you were ultimately the chief of staff and chief operating officer.

So have two questions sometimes you'll will see or I will see people debating this PILOT and the tax incentive question is well Nashville doesn't use them other cities in Tennessee don't use them Why does Memphis rely so heavily on them?

So I'm curious your from that state perspective was that how you saw it and the second thing is at the state states are competing against states cities against cities Memphis against Mississippi to some degree.

So what is that landscape nationally state by state with the use of incentives and again what with cities within Tennessee what is the landscape like?

- Yeah thanks it's highly competitive.

When I was at the state obviously we were competing against other states and the projects are they're really there's a lot of pre-selection before they even enter the pipeline for consideration.

And the state's position was always and as we considered grants and incentives for these we were always asking the question is the local community participating?

And that included Nashville.

And if the answer was that was yes then you had a co-investment partner and obviously what we're focused on here in Memphis is creating a competitive environment so that when the state has projects that are derived there and they're considering the best location to compete that they see Memphis as one of those markets that they can run through the tape at the finish line on this opportunity.

So it's highly competitive and we're competing not just with Mississippi, Arkansas, or even other communities in Tennessee we're competing globally.

And I've stated recently it's a win or learn opportunity you don't lose necessarily you have the opportunity to learn why you didn't land that and what we need to do to make the market competitive.

I'm looking at ways in which we can build a work chest that includes both incentives but also having a workforce advantage, having an infrastructure advantage.

We have so many attributes right now and I think one that has entered the consciousness of these site selection criteria is our resiliency with respect to diversity and inclusion.

That is a huge strength for us in the market where you have companies that are looking at ways in which they can diversify their own employee base and be in a community that faces these issues soberly with a mature posture and one that is focused on partnership.

And so I am really excited about the way that we can position Memphis in unique ways reflect on our differentiating factors and certainly incentives are always within that conversation.

They don't always necessarily have to be the tipping point but if you look at these this are multi-decade transactional commitments to a community.

And we have to focus on that and the finances are certainly an important part of that the livability, the cost of doing businesses there.

And those are all of the factors that you're at the Greater Memphis Chamber we're focusing on strengthening of that.

So we're less reliant I should say on just one component of the deal making - With a few minutes left Bill, we go to you.

- Let me ask you then what are the lessons of Electrolux a company that came here when we were really struggling with the worst recession since the Great Depression.

And a company that really I think stayed here about as long as the PILOT lasted or maybe not even that long.

what's the lesson from there?

- Yeah I think there are a lot of examples like that Bill across the Tennessee landscape of economic development.

It's not the first time it's happened I think we focus on making it the last time that it happens.

But there's a lot of fluidity in the market sometimes you can't predict where the market trends will go.

But I think if you focus on protecting the taxpayer base of incentives through accountability, reimbursement models.

If you have more shots on goal you're less in a position to maybe give too much on the deal.

We want businesses selecting Memphis because it positions them from a point of strength, it enhances their business model and market entry and allows for them to grow.

It's not just because we gave them a building or we gave them a PILOT.

That's the incentive part of it is always there but maybe we don't have to forsake too much to land a company.

If we've created an environment that is highly competitive with the industries that we are selecting and targeting that are very attractive to us.

- Beverly if I can ask you about the idea of looking at the average wage that a company pays that might come here and might get a PILOT incentive is it possible for that average to look really good like 60,000, $65,000 a year but yet for most of the employees of the company to make around 40,000 because the executives make such high salaries that the average winds up being higher than most of the employees of that company make?

- Yes I'm certainly I certainly believe that it is possible but I think there are also some accountability measures that are put in place to assess and evaluate what companies have said they're going to do versus what they are doing so there is accountability.

I mean I know that EDGE has processes established and put in place and they inform companies in advance that they're gonna get a scorecard and they will be assessed and evaluated, and there will be some consequences, or at least some counseling, some information, imparted and consequences for not being able to deliver against what they committed to.

And I think as opposed to punishment it's more what is it that we can do to help you maximize or be able to meet what you said was necessary are there things that we need to do as an organization to allow you to live up to what you have defined.

But I don't think companies come here and they're just scot free.

I think they come here we are hopeful that they will deliver against what they promised but if they haven't there are consequences even in the bodies of the agreements.

There are also clawbacks that can be put in place, so if a company says I'm gonna be here a certain period of time and you're not then there are things that are built within the contract or the agreement that would say well if you're not here are some of the things that will happen and here's some of the things that we want.

So I don't want you to think that that's just something that is done and they're left to their own devices.

There are accountability measures in place.

- And we will be, as I said, we're out of time unfortunately.

And thank you Beverly, and thank you Ted.

We have a couple shows coming up in the next weeks on PILOTs and the debate over reform and change.

But again that is all the time we have right now.

Remember you can get past episodes of the show on wkno.org.

or you can just search behind the Headlines on YouTube, or you can download the full podcast of the show on The Daily Memphian site, iTunes, Spotify, or wherever you get your podcasts.

Thanks and we'll see you next week.

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